LATAM drives revenue growth; steady volume growth Revenue rose by 13% YoY in Q2FY19 led by strong performance in India and LATAM businesses (contributing around 66% of total sales). LATAM business registered a strong revenue growth of 26% YoY in Q2FY19 led by decent growth across geographies in the region especially Brazil barring Argentina which was impacted by currency depreciation and overall economic situation. LATAM's revenue contribution has increased to 41% during the quarter from 37% in Q2FY18. Management expects strong performance to continue in LATAM in H2FY19 as well led by advance orders received in Brazil. Going ahead, we expect LATAM revenue to grow at a CAGR of 13% over FY18-20E on the back of strong...

UPL

Sharekhan

Scales higher in the top five league globally: With Arysta's acquisition, UPL moves ahead in the global agri-chemical ranking and is now among the top five players. The acquisition is expected to provide significant benefits to UPL, as it complements UPL in many areas. Arysta is an asset-light company and a global provider of innovative crop-protection solutions, including...

UPL

Sharekhan

Scales higher in the top five league globally: With Arysta's acquisition, UPL moves ahead in the global agri-chemical ranking and is now among the top five players. The acquisition is expected to provide significant benefits to UPL, as it complements UPL in many areas. Arysta is an asset-light company and a global provider of innovative crop-protection solutions, including...

In Brazil, UPLL primarily engages in soybean and maize (together account for 63% of the countrys total plantation area) and Arysta in sugarcane and cotton (19% of the countrys total plantation area). Moreover, UPLL has a strong presence in fungicides, while Arysta has a robust platform of bio solutions (#2 globally in bio stimulants) and seed treatment in Brazil. Brazilian farmers are enjoying strong demand for soybean, primarily due to the tense ties between the US and China. According to industry sources, China accounts for more than 60% of the soybean traded worldwide. This apart, Brazils producers are selling soybean at a premium soybean that were to be loaded in August fetched USD2.21/bushel more than Chicago futures as on July first week the widest gap since 2014. Where Unizeb Gold (brand of mancozeb) is sold at ~USD4 per unit in Brazil, Tridium fetches a realization of USD8-10 per unit.

We maintain Buy with a TP of Rs 719 (9x Sept'20 EV/EBITDA). UPL reported Sales/EBITDA/APAT growth of 12.9/16.2/18.4% to Rs 42.57bn/Rs 7.87bn/Rs 2.85bn respectively. PAT was weighed down by a higher tax rate (26.6% against 17.5% in 2QFY18) due to derivation of higher profits from India (attracting a higher tax rate).

UPL's consolidated revenue for Q1FY19 came in at Rs 4134cr, an increase by 7.3% yoy. This was primarily driven by rise in revenue from Agro activities and Non-Agro activities by 7.6 per cent and 7.3 per cent yoy, respectively. The operating profit for the quarter stood at Rs 797 cr, a rise...

UPL

KRChoksey

UPL reported revenue growth of 11% YoY to INR 41.34bn against our estimates of INR 41.06bn. The growth was led by steady growth from agro activities (+7.6% YoY) supported by higher growth from LATAM (+17% YoY) along with decent growth from India market (+12% YoY) due to low base. OPM expanded by 34bps YoY to 20.5%, which led EBITDA to up by 12.9% YoY to INR 8.5bn against our estimates of INR 8.15bn....

We now value UPL at 9.0x Jun'20 EV/EBITDA and maintain Buy with a revised target price of Rs 700 (implied P/E of 12.6x Jun'20 EPS). UPL reported Sales/EBITDA/APAT growth of 11.0/15.3/7.8% to Rs 41.3bn/Rs 7.97bn/Rs 5.15bn respectively. India business reported a growth of 11.0% YoY to Rs 12.4bn on a lower base, while Latam business showed a recovery with a growth of 17.2% YoY to Rs 8.6bn.

UPL Corporation Ltd, international arm of the UPL (United Phosphorus Ltd), has entered into an agreement to acquire Arystra Lifesciences for US$4.2bn, making it to Top 5 in the world. UPL will now have sales of US$5bn & 20%+EBDITA margins (presynergies).Transaction provides UPL a perfect match with powerful synergies across geographie..

20 July 2018 UPLL boasts of an agrochemical product portfolio that is spread out across geographies and crops (including fruits & vegetables, rice, soybean and cotton). The acquisition will not only boost UPPLs product portfolio for crops where it already has a strong presence, but also in those where it has limited presence (e.g. wheat, barley, nuts and a wide variety of specialty crops). This apart, the acquisition will strengthen the companys product portfolio in the European cereal market, where its presence is currently limited to sugar beet, fruits (grape) and vegetables. As Arysta is multiple times larger than UPLL in both the aforementioned categories, we believe the acquisition help UPPL to transform into a true integrated crop solutions provider. Arysta relies on contract manufacturers for raw material sourcing from low-cost manufacturing countries like India, China and Eastern Europe. Post-acquisition, the sourcing cost of Arysta will reduce given UPLLs strong manufacturing base.

UPL's long-term prospects remain positive, led by focus on branding and launching new innovative products, maintaining geographical presence , product and crop diversity, increasing share in the global agrochemical market, improving Innovation Turnover Index and consistently investing in backward as well as forward integration, resulting in better cost management. Acquisition of Arysta Life Sciences, a part of the US-based Platform Specialty Products, will make UPL the world's fifth largest crop protection company and the largest generic player with combined revenues of slightly lower than $4.6 billion . The company is currently the ninth largest with annual revenues of $2.7 billion. Further, given the strong manufacturing base of UPL, sourcing costs will be reduced as Arysta gets most of its raw materials from India and China. A strong supply chain can...

UPL

KRChoksey

UPL reported a revenue growth of 6.5% YoY to INR 56.9bn against our estimates of INR 58.8bn. The growth was led by mixed of geographies such as Europe (+7.3% YoY) & LATAM (+7.2% YoY). OPM inched up by 32bps YoY to 21.4% resulting into EBITDA growth of 8.2% YoY to INR 12.18bn against our estimates of INR 12.86bn....

UPL

Dolat Capital

Net sales grew by 7% to ` 56.9bn lower than our estimate by 6%. Volume growth during the quarter was 8% and exchange impact of -1%. Adjusted EBITDA grew by 9% to ` 12.2bn higher than our estimate by 3%. PAT degrew by a percent to ` 7.4bn. North America, Latin America and Europe grew by 7% while India and RoW grew by 6% and 5% respectively. In FY18, industry witnessed a de-growth of 0.2% while UPL outperformed the industry with a 7% growth and constant currency growth of 9%. UPL...